Takeaways from ViaSat CEO Dankberg’s May 17 investor conference remarks:
— LEO constellations: ‘I don’t understand OneWeb/SpaceX. Few care about latency.’
— ViaSat-2: 100-200 Mbps for residential users, wireless model in Lat Am.
— 6-month penalty vs Hughes’s Jupiter-2 will evaporate in 6 months.
— Gogo’s 2Ku service is ‘just an antenna. The issue is satellite capacity.’
— A prospective ban on laptops on commercial flights won’t materially damage larger IFC market.
PARIS — ViaSat Chief Executive Mark D. Dankberg on May 17 said his disbelief in the business model of large constellations of low-orbiting broadband satellites remains as strong as ever despite the success of some of these systems in raising capital.
Asked why several of the constellations have attracted investors, Dankberg said:
“I don’t know. I don’t understand the OneWeb and SpaceX stuff. When you go to market, latency is like the last thing people ask about.”
Dankberg allowed as how some customers do ask about latency-sensitive applications like video games’ performance on ViaSat’s satellites in geostationary orbit 36,000 kilometers over the equator.
“We tell them there are a lot of video games that won’t work. That doesn’t impact our go-to-market appreciably. By far the most impactful is: ‘How fast is it and how much bandwidth do I get?’”
As he has before, Dankberg said the LEO constellations’ architecture is analogous to asking cellular network providers to prepare for 6G rollout by uniformly spacing all their cell towers throughout a geographic area, irrespective of the fact that demand varies hugely by geography.
“We think these LEOs will be really good for latency [the constellations are at around 1,000-1,500 kilometers in altitude], but much worse from a bandwidth productivity perspective.
“When OneWeb announced their Intelsat merger, they said they’ll have 1.4 terabits of usable capacity for a $3-billion-plus constellation. That’s just one satellite for us, which is half a billion. I like that ratio,” Dankberg said.
A OneWeb official said Dankberg’s figure was inaccurate. The 880-plus constellation will have a total throughput of 7 Tbps, this official said.
The ViaSat-3 satellites, to be launched starting in 2019, are billed as having 1 Tbps of throughput each, nearly 10 times the capacity of the ViaSat-1 satellite that has been in orbit for five years.
ViaSat-2 is scheduled for launch on June 1. With some 300 Gbps of throughput, it is more than twice as powerful as ViaSat-1.
Addressing the MoffettNathanson Media & Communications Summit in New York, Dankberg said ViaSat-2 will enable ViaSat’s Exede service, now at 25 Mbps, to offer subscriptions at 100 Mbps and even 200 Mbps in some cases, with virtually unlimited bandwidth ceilings.
With ViaSat-2, a cellular network model in Latin America
ViaSat-2, built by Boeing Satellite Systems, will also extend ViaSat’s consumer broadband reach into Latin America. Dankberg said testing of the service has begun in Mexico, with Venezuela and Colombia among the other target markets.
For these developing markets and others planned for ViaSat-3, the company will be providing WiFi hotspots with prepaid cards for airtime use. “You pay $2 or $3 a month and you get airtime pricing as good as any mobile [subscription] in many of these markets,” he said.
ViaSat-2 also extends the company’s Exede in the Air service to the trans-Atlantic air routes. He said ViaSat “will announce our first trans-continental customer very soon.”
ViaSat competitor Hughes Network Systems, owned by EchoStar Corp., launched its Jupiter-2/EchoStar-19 satellite six months ago and is using the satellite to expand its subscriber base in regions whose Jupiter-1 beams had been sold out.
ViaSat-1 has the same problem. Dankberg conceded the six-month head start by Hughes, but did not think it would be important in the long run.
“I don’t think it’s going to result in huge attrition for us,” he said. “The market is pretty big. They have lots [of new capacity] and we don’t. I think that will persist for six months and then go away.”
Debating whether Gogo’s 2Ku solves the congestion problem
Competitor Gogo Inc. has introduced a new-generation antenna for in-flight connectivity, called 2Ku, and has secured a large backlog of airline orders for it. But for Dankberg, Gogo’s 2Ku does not solve the problem of a lack of satellite capacity in airspace over large airports.
“[Gogo] has basically said: It’s an antenna problem,” Dankberg said. “They have this thing they call 2Ku and say it doesn’t matter what satellite we use, what matters is that we have a good antenna. That’s not true. It makes no sense.”
Gogo has purchased satellite bandwidth from multiple Ku-band satellite operators and has said it has, in the aggregate, more than enough bandwidth to handle demand.
Gogo CEO Michael Small on May 18 responded to Dankberg’s statement in a Twitter post saying:
Dankberg did not say 2Ku offered no performance advantages. His point was that this advantage won’t mean much given the lack of capacity of even the most modern Ku-band satellites compared to a Ka-band system like ViaSat’s. The demand surge over airports as 100 aircraft, each with 100 or more devices, inhabit the same airspace from a satellite’s point of view will overwhelm the capacity of the satellites furnishing 2Ku aircraft.
If airlines are counting on a high customer-use rate in return for offering a free service, they will be disappointed. On the other hand, he said, if 2Ku customer airlines are OK with a service that costs $35 per passenger and gets only a 7% adoption, then that’s a viable model.
“Can you make a service that is “good” at $35 with Ku-band?” Dankerg said. “I’d say the answer to that is yes. The second question is: Is getting 7% penetration with passengers paying $35 a good business model for the airlines? I don’t think that is going to be the case.”
Gogo has indicated its interest in extending its Intelsat contracts to include OneWeb’s LEO constellation, a factor that could change the equation over busy airports as Intelsat and OneWeb allocate Gogo traffic between them.
Possible laptop ban immaterial to IFC market, and unsustainable
Dankberg said a possible ban on laptops on commercial flights would not stunt the growth of the in-flight-connectivity (IFC) business.
“Actually far the most devices are mobile phones,” he said. “The laptops are a concern for the business market — that’s the 7%. For the rest of the market, it’s phones, tables and then laptops.
“So far, the consensus is that banning devices from the cabin is not a long-term solution. And connectivity is a long-term problem. So it hasn’t slowed down even the Mideast carriers most affected by this.”